Kingdoms of Amalur: Reckoning 2 was in pre-production over at Big Huge Games before the studio was crushed due to 38 Studios’ debt coming to bite them in their rears. The entire staff at Big Huge were laid off and both studios collapsed.

Joystiq cites “several sources” with knowledge of the Maryland studio’s plans that the sequel was even close to securing a publishing deal (the original’s publisher, EA, passed on the project) before the mass layoff.

On top of all this bad news, 38 Studios still owns the IP, tech and code rights to the series so don’t expect any of the former Big Hugs Games staff to swoop in and revive Reckoning 2. Even worse (yes, it gets worse), it seems likely that 38 Studios will surrender those goodies to the State of Rhode Island in lieu of loan payments.